By Luiza Ilie and Elizaveta Gladun

BUCHAREST (Reuters) -Hard-right eurosceptic George Simion won the first round of Romania's presidential election re-run on Sunday, near final results showed, after a ballot seen as a test of the rise of Donald Trump-style nationalism in the European Union.

Ballots from nearly 99.6% of voting stations showed Bucharest Mayor Nicusor Dan, 55, was in second place at around 21%, behind Simion's 40.6%. They will meet in a runoff on May 18.

A Simion victory could isolate the country, erode private investment and destabilise NATO's eastern flank, where Ukraine is fighting a three-year-old Russian invasion, political observers say.

It would also expand a cohort of eurosceptic leaders in the EU that already includes the Hungarian and Slovak prime ministers at a time when Europe is struggling to formulate its response to Trump.

"This is not just an electoral victory, it is a victory of Romanian dignity. It is the victory of those who have not lost hope, of those who still believe in Romania, a free, respected, sovereign country," Simion said.

Benefiting from a wave of popular anger against mainstream leaders, Simion, 38, opposes military aid to neighbouring Ukraine, is critical of the EU leadership and says he is aligned with the U.S. president's Make America Great Again movement.

"We are a Trumpist party which will govern Romania and which will make Romania a strong partner in NATO and a strong ally of the United States," Simion told foreign media shortly before polling stations closed.

Dan, an independent running on an anti-corruption platform, overtook former senator Crin Antonescu, 65, a centrist candidate backed by the three parties in the pro-western coalition government for his spot in the runoff.

He won substantial support among Romanians abroad - who have favoured anti-establishment candidates such as him and Simion in recent years - votes from 96% of ballot boxes showed, winning 26%, to Simion's 60% and Antonescu's 7%.

"Eyes on the West, I believe that this is what the campaign should be about, about keeping the Western direction in Romania," Dan told reporters on Sunday evening.

"... (and) understandably explaining to the people at home the shortcomings we had in our relations with these institutions. They came rather from our own fault in not being active and prepared."

Observers said he would struggle to beat Simion in the run-off more than Antonescu due to rivalries between him and mainstream parties that make it harder for voters to switch. Many in the ruling Social Democrat and Liberal parties shared more beliefs with Simion than Dan, they said.

Victor Ponta, a former leftist prime minister who has shifted to conservative nationalist politics, could play a pivotal role following Sunday's vote after finishing in fourth place with 1.22 million votes, and could leverage his electoral strength to become a kingmaker in the political landscape.

"Simion has a bigger pool of votes than Dan at the moment," said Cristian Pirvulescu, a political scientist. "Romania can now shift the power balance in Europe towards extremism."

RUSSIAN MEDDLING

Sunday's vote came five months after a first attempt to hold the election was cancelled because of alleged Russian interference in favour of far-right frontrunner Calin Georgescu, since banned from standing again.

Simion who only scored 14% then, appears to have ridden an upswell of support for the far-right driven by Georgescu.

On Sunday he voted alongside Georgescu, who called the election a "fraud" and urged people to take their country back. As dozens of people thronged outside the voting station chanting "Calin for president", Simion said his vote was "to restore democracy".

Simion is not the only MAGA-style politician seeking election in central Europe. Karol Nawrocki, the presidential candidate backed by Poland's main nationalist opposition party in a presidential election on May 18, met the U.S. president this week.

"Romania and Poland are two important countries for the United States," Simion told Reuters on Friday.

"We represent partners and we represent allies, both military and politically, to the current (U.S.) administration. This is why it is important for MAGA presidents to be in charge in Bucharest and Warsaw."

Romania's president has a semi-executive role that includes commanding the armed forces and chairing the security council that decides on military aid. But Simion has said that, if elected, he could seek to elevate Georgescu to some kind of a leadership role.

Observers say the country's leftist-led governing coalition might buckle if Simion becomes president.

To date, Romania has donated a Patriot air defence battery to Kyiv, is training Ukrainian fighter pilots and has enabled the export of 30 million metric tons of Ukrainian grain through its Black Sea port of Constanta since Russia's invasion.

The country's president can also veto important EU votes and appoints the prime minister, chief judges, prosecutors and secret service heads.

The Trump administration has accused Romania of suppressing political opposition and lacking democratic values after November's election was cancelled on what Vice President JD Vance called "flimsy evidence".

(Editing by Giles Elgood, Marguerita Choy and Diane Craft)